How to Create a Cryptocurrency Exchange Platform: Your Detailed Guide

The world of blockchain technology has created a solid impact after its launch in 2008. It has given birth to several exchange platforms for assisting individuals in buying digital currencies. The increasing interest of investors has led to a considerable boost in the business of even a traditional cryptocurrency exchange development company such as Appinop. The major reason behind this rise is the wide acceptance of cryptocurrencies as a method of payment.

People from almost every part of the world have begun to perform transactions using these currencies. In addition to the investment, they have started buying electronics, travel packages, etc. using them. All these factors prove it is a great time to enter the crypto business in order to make huge profits.

If you want to begin a cryptocurrency business in the present era, there are plenty of things you need to consider. See below a dedicated post explaining various steps needed to be followed for starting a crypto exchange in 2022. Please do read every part of the article to ensure no important information gets missed.

What are the major types of Cryptocurrency Exchange Platforms?

A cryptocurrency exchange is a platform that allows users to change their cash or regulated currencies into digital currencies and vice versa. The main motive of most exchanges is providing services for selling and buying cryptocurrencies instead of real currencies. There are mainly three types of digital exchange platforms that should be mentioned:

1.    Centralized Cryptocurrency Exchanges

These exchanges work almost the same as traditional stock exchanges, where buyers and sellers visit to sell or buy their assets. Also known as CEX, the role of this exchange is to work as a middle-man and provide desired services to both parties. 

In simple language, centralized exchange means giving authority to someone to handle the money. A few top examples of centralized exchange platforms are Coinbase, Gemini, Kraken, Binance, and Bitterex, among others.

Pros

●    Convenient to understand interface

●    Plenty of exciting features for traders

●    Extremely fast transactions

Cons

●    Higher transaction fee - up to 8%

●    Funds need to be stored in crypto exchange accounts

2.    Decentralized Cryptocurrency Exchanges

Also known as DEX, they work on the true philosophy of the cryptocurrency industry. There is no middleman in these exchanges for holding the funds of investors. It allows users to have direct trades and is considered tough to attack by hackers.

There are plenty of well-known DEXs who have attained plenty of popularity among investors. Some of the biggest names are Waves DEX, IDEX, Stellar DEX, and BISQ DEX.

Pros

●    Low chances of losses as funds not stored in user funds

●    Affordable to use

●    New users have to register and verify their accounts

 Cons

●    Lack of third-party moderation

●    Order closing depends on other traders

3.    Peer to Peer Exchanges

The third type of crypto platform to mention is peer-to-peer exchanges, also known as P2P in the digital world. Here, the traders have to place bids on which other people interested to buy can respond. If both parties agree on the terms, the deal can be placed. 

Cryptocurrency Exchange Software works as the intermediary using which deposits are transferred confidentially from seller accounts to buyer’s wallets. It is considered one of the safest bets in terms of security if we talk about the crypto world. The security of these exchanges are pretty high and known to be difficult for breaking, even for top-level hackers.

Pros

●    Protection against frauds with crypto blocking feature

●    Perfect for beginners due to easy to understand interface

●    No fees are charged from buyers for deposits and exchange

Cons

●    Chances of errors like sending deposits to the wrong person

●    The transaction takes time to complete

Expert Suggested Practices On How To Make A Cryptocurrency Exchange Platform

Cryptocurrency Exchange Design Best Practices
User Research

User research is essential for understanding the market, your target audience's demands or requirements, and your organization's overall objectives. Create a requirements document outlining the project's most important goals and outputs. Your IT partner may utilize this data for effective data collection and analysis, via interviews with individuals, surveys, and analyzing the competition. It is necessary to have all these data in order to create effective UX solutions and guarantee a smooth journey for the consumer. 

Prototypes

Creating a visual prototype and wireframes for a cryptocurrency exchange platform is a worthwhile first step before diving into the design process. This shift will let you examine UX remedies and fix any problems you may find. The effectiveness of user-system interactions and the usefulness of integrated features may be ascertained by real-world testing of a prototype with real users.

Robust Capabilities

Implement your app's features thoughtfully for the purpose of the users' ease, regardless of how much importance you've given each feature throughout development. Building a Minimum Viable Product (MVP) is a good place to start if you are unsure of whether or not your platform's features will be effective in generating leads. Without increasing costs, you may gain a better sense of the product's potential and the feature's importance. 

You should try to solve problems that are typical for crypto apps, such as a shortage of tokens, bad customer service, too many limitations, and so on.
 

Quick and Easy Browsing

Whether it's a cryptocurrency exchange or a more general financial product, any platform dealing with crypto or fiat transfers has to be trustworthy and simple to use. Be sure the user experience is simple and straightforward. When users can easily navigate your crypto exchange, they can rapidly learn how to utilize it and obtain the details they want. 

If a transaction appears complex and ambiguous, investors may lose faith in it. If you want to succeed, you must keep in mind the following tips to create effective user interfaces: 

●      Signing up process should be quick and simple.

●      Ensure an easy onboarding process.

●     A seamless consumer experience must be the priority.

Simple and Straightforward Interface

Customers are more likely to be pleased with their trading experience and to continue using your platform if its interface is easy and friendly to interact with. Here are some guidelines to follow so that your cryptocurrency trading app's user interface and user experience remain consistent:

Avoid inappropriate usage of visuals and animations. Design a user interface that is cutting-edge without becoming intimidating.

Make sure your dashboard is easy to navigate. The user interface should be basic and comprehensive because it is one of the most important tools for the user.

You should carefully choose the colors you use. They may serve as symbols of your company's identity and as visual cues, particularly when data is being categorized and represented graphically. 

Integral Elements to Sustain the Exchange
A Large Number of Active Users

You need a large number of both buyers and sellers to sustain a profitable cryptocurrency exchange. Trading can be started with a substantial investment from the owner. However, due to the limited number of participants, trading volume can fluctuate, rates can diverge significantly from those at other exchanges, and a lot of money can be spent very rapidly.

As a result, the owner of the crypto exchange platform is liable for keeping supply and demand in equilibrium and keeping rates stable in the face of unexpectedly high demand.

Rapid Response Time from Servers

The time it takes to fulfil a user's order must be minimal. When people engage in transactions using predetermined pricing, the market rates are always shifting. As a result, certain marketplaces guarantee the order from the customer's perspective and bear any associated fees. The crypto exchanger's lightning-fast processing time comes from the smart use of cached data. However, this must not be accomplished at the price of computation accuracy, as a cryptocurrency exchange demands great performance.

Security

The foundation of any new cryptocurrency trading platform is the reliability of its security measures. Your work needs to be trustworthy because hackers frequently target digital markets. Cryptocurrency exchanges are vulnerable to cybercrime and other threats that could ultimately lead to their collapse. 

Cost To Create A Cryptocurrency Exchange Platform

It's important to examine a number of aspects when determining how much money would be needed to launch a cryptocurrency exchange.

Discovery Phase & Design

Designers will make a graphical representation of your cryptocurrency exchange based on your specifications and market research, offer several UI variations, and evaluate the usability of each prototype to determine which one will be the most successful in the marketplace. Having a clear picture of how users will interact with the trading platform will help you spot any problems before they affect the user experience.

Website Development

Developers are now focusing on the implementation of UI design. You can think of them as the artists who render the user interface of your trading platform. This phase entails the development of a bespoke trading engine. Next, professionals move onto the front end, where they integrate the back end with the front end.

API Integration

Integrating an API into a crypto exchange platform lets you connect it to other services on the web. The efficient operation of your cryptocurrency exchange business depends on the ability of different systems to communicate with one another and stay in sync without any interference.

Blockchain

Transactions, funds, and more can all be monitored via the blockchain network. Since there is only one authoritative record of each transaction, all parties involved can feel secure in their efforts and reap the rewards of the trade with renewed vigour and optimism.

Testing

The only way to ensure your product is free of flaws has no weak points, and can be further enhanced is to put it through rigorous testing. You should release your online trading platform to the public whenever you are satisfied with its quality.

The projected cost of developing a web application for a cryptocurrency exchange is from $110,000 to $150,000.

Cryptocurrency Exchange Required Functionality 
 

Authentication and Authorization

Verification is critical for protecting against fraud and ensuring honest business dealings. When creating a product, developers should eliminate any vulnerability to hacking or other forms of illegal access to user accounts. This verifies that the crypto exchange follows all applicable regulations worldwide.

E-Wallets

If you want to build a cryptocurrency exchange, you should give your customers access to the most popular electronic wallets. To extract digital currency and convert it to fiat cash, digital currency eWallets must facilitate safe transactions.

Trading Engine

The basis of each cryptocurrency exchange is its trading engine. It determines how well your system works. It manages user balances, generates charts, compares rates and offers, calculates and processes pricing and incentives in real-time, etc. Therefore, designing a cryptocurrency exchange engine is among the most complex undertakings that must be done with the utmost expertise.

Charts and Dashboards

The ability to easily compare cryptocurrency exchange rates and monitor exchange rate history is a vital tool for every trader, and this is where dashboards come in. The dashboard allows users to have access to competent support from either service staff or an AI-powered chatbot at any time, day or night.

Admin Panel

This feature keeps tabs on how many buyers and sellers there are at any given time as well as the status of wallets, deals, and content. When an unexpected user action is detected, the system will alert the administrators. The admin dashboard should come equipped with the KYC/Anti-Money Laundering and Reporting features required by the crypto exchange's legal procedures.

Record of Purchases and Sales

Open orders to purchase or sell a cryptocurrency are recorded in the order book. It is generated automatically by a web-based trading platform by categorizing buy and sell orders into two distinct lists. When a user sees a deal that piques their attention, the system conducts the transaction on their behalf.

Alerts and Notifications

The purpose of notifications is to keep users abreast of all the latest happenings on the market. Alerts can be built within the system to display the latest market data, including the price movements of specific trading pairs. The alerts and notifications you receive on your device should be helpful and easy to configure, but not intrusive.

Tools for Analysis

Your customers will need quick reporting and data on the latest happenings in the cryptocurrency market. As a result, analytical solutions that work well might improve your product and make it easier to use. You can help users keep tabs on this information in real-time by providing them with the appropriate analytical tools and integrations.

Basic Security Settings

Trading cryptocurrencies always involves dealing with private information, financial transactions, and high-value data. For this reason, high-level security measures for systems are essential. Users need to know that their information and money are safe on your platform, so make that a top priority. You should try your best to stop any kind of breach from happening.

Integration Of Bank Cards

Customers making purchases on the exchange platform should be allowed to utilize credit cards. With bank card integration, your clients will have the ability to add funds to their accounts and withdraw funds at any point in time. 

Arbitration

Arbitration paves the way for consumers to evaluate the market prices of various cryptocurrencies and earn from profitable trades across exchange platforms. Helping your users to trade cryptocurrencies on your exchange will increase the popularity of your platform, as this kind of trading is prevalent today.

NFTs Integration

Non-Fungible Tokens (NFT) are a form of digital currency that may be used to prove ownership of any intangible digital asset, such as an image, video, or audio file. NFTs are blockchain-based just like other crypto tokens and coins, but they are not interchangeable. As a result, we cannot refer to them as money.

NFTs, on the other hand, are developed with the same technology as Bitcoin, Ethereum, etc., and so present a promising opportunity for trading on an exchange.

Other Features

The vast majority of your clientele probably won't make use of your platform's advanced features, such as an extensive cryptocurrency list, automatic trade selection, compound orders, etc. However, such additions may be useful in drawing professional investors.

How Do You Start Your Cryptocurrency Exchange Business?

A cryptocurrency exchange business can turn out to be greatly profitable by using the right approach. Although the number of platforms offering such services is pretty more, there are very few that give quality service. See below a set of different steps for creating a cryptocurrency exchange business in detail. 

●    Getting Legal Counselling for Obtaining License

Having knowledge about the regulatory needs of this business is very important before setting the plan into action. It is vital to obtain proper licensing in all the areas where you want to operate your business. Every country has a certain set of rules that must be followed to attain licensing.

For example, there are certain SEC and CFTC rules for digital currency operators in the United States, whereas countries like Cyprus allow to create crypto exchange website without many regulations. So, it is strongly suggested to have the help of a legal counsellor to understand jurisdiction rules conveniently. 

●    Gathering Funding

A business started without an estimation of the total budget will surely be a disaster. The cost to start a crypto exchange varies according to what kind of features need to be added. There are plenty of things that need to be accounted for in the funding plan, ranging from website and app development to the initial advertising and registration process. 

A common mistake made by start-ups is not planning for the future as it will take a certain time to begin profits. Make a proper plan from beginning to end to have the desired results. It will be very helpful for managing the funds in a useful manner. 

As we have already mentioned, there is a range of things needed to be considered while creating a cryptocurrency exchange website or app. Having an idea will make sure you can accomplish all the tasks by staying in the budget.

●    Partnering With a Trusted Payment Provider

Having a reliable payment provider will set the base of your cryptocurrency venture. It can be a bank or a payment provider like Google Pay, whatever seems appropriate to your audience. Also, ensure they don’t charge high exchange rates from the users as it can negatively impact your business. 

Furthermore, it would be better to add multiple payment providers for the convenience of users. It will be a great boost for increasing the number of sign-ups with your platform. It gives a choice to them for paying as per their convenience. 

●    Stay Attentive Towards the Software

The number of young entrepreneurs looking to start their ventures has steadily increased in the last few years. However, most don’t care about the cryptocurrency exchange software and features that need to be added to it. 

It would help if you connected with a quality crypto exchange development company that usually has multiple packages to serve the clients. Many development firms allow customizing software according to the exchange’s requirements. 

Choosing a development company who are specialists in creating investment platforms. The reason behind that is they fully understand the prospects of this industry. 

●    Designing Architecture 

Designing the exchange’s architecture is the most important step that should be evaluated carefully during the initial process. If we talk about the basics, the exchange has certain must-have features. Firstly, ensure a convenient trading engine gives access to the order book and conveniently processes the transactions. It should be able to have information about both purchasing and selling orders. 

The next one is the digital wallet, which should be very quick to launch and allow users to easily convert virtual money into fiat currency. Also, don’t forget to add a powerful admin panel for running the trading operations and providing professional service to the customers. 

The fourth most important feature to take into consideration is the frontend which should be configured enough to make the transactions smoother and faster. Most people are worried about the cost to start a crypto exchange but don’t take much emphasis on its architecture. However, you should never make this mistake and emphasis these things. 

●    Security Level

There are lots of news about digital exchanges getting hacked, and investors losing millions of dollars. As per a rough estimate, more than 50% of total cryptocurrency exchanges shut down after hacking. If you don’t want to be one of them, choose a professional agency to create an exchange website for protection against online threats. 

Your platform should pass all the parameters for keeping every transaction and withdrawal safe. It is also important to protect the sensitive information of clients that they provide during the registration process. 

It is vital to add high security to succeed in the cryptocurrency exchange market as a single online attack can ruin your venture. Take the help of experts to add desired security to your website and mobile app. 

●    Marketing and Press Releases

The journey begins after creating cryptocurrency exchange software as the real battle still awaits on the other side. There should be a proper marketing strategy created after getting suggestions from the experts in this industry. 

It can be connecting with certain crypto news platforms to increase your presence on the internet or having regular PR conferences to promote your site. Plan your marketing activities within the budget to make sure everything proceeds according to the plan. 

I have seen many exchanges that target free social media marketing rather than spending money on paid advertising. It can keep the platform away from critical success in the future. However, I strongly suggest every start-up to avoid this mistake as it can be harmful for a positive brand reputation. 

●    Active Customer Support

A proper regarding the cryptocurrency exchange development cost can’t be completed without adding active customer support to help the users. It is one of the most critical steps that shouldn’t be missed at any cost.

If an exchange succeeds in providing quality customer support services, the chances of shining in this industry are pretty high in the long term. The customer service team should have the proper knowledge and know how to solve the problems of users. 

Try to add a ticketing system already used by platforms like Binance for helping their members. Also, representatives should be available every time as crypto trades 24X7. Having a responsive customer system will play a critical role in maintaining the client base. 

What Is The Right Tech Stack for Crypto Exchange Platform?

Most people looking at “how to make a crypto exchange website” don't know what tech stack is. A tech stack can be defined as a set of technologies used by a development company to create an app or project. If we talk about beginning a digital currency exchange, the selection of the right tech stack becomes even more important. 

Always go for a technology that helps in making the platform scalable and powerful. These exchanges have to accommodate a large base of users, making selecting an adequate framework even more important. That’s why I always choose the Cryptocurrency exchange development company with extended research and testing procedures. 

Have a look at the popular technologies you can use for creating a crypto platform after consulting with your service provider:

●    Web Application Development

There is no way a crypto exchange can work without having a website for which we need responsive front-end & back-end development frameworks. Below are the major frameworks for web application development:

Front-end Development

The most effective and popular front-end development technologies used by digital currency exchanges are React, Vanilla.js, Angular, and Vue.js. Choosing any of them will boost the development work. 

Back-end Development

As for back-end development, there are plenty of options for cryptocurrency exchange software. Consider the following Laravel Django, PHP, and C# thanks to their superb functionality. 

A few very common database solutions for web development are SQLite, MS SQL, and MongoDB.

●    Mobile App Development

The chances of a digital exchange’s success without having a mobile app are almost zero nowadays. It is critical to use technology that works superbly well on iOS and Android devices. 

iOS

In iOS, there is a set of different technologies used for various purposes mentioned below: 

Development Kit: PromiseKit, SDWebimage, and CocoaTouch

Analytics: AppsFlyer, Parse, and Firebase

Frameworks: Objective-C and Swift

Data Storage: Realm, Core Data, CryptoSwift

Android

The following tech stacks are preferred for the Android app of cryptocurrency exchange software:

Development Kit: Android Jetpack and SDK

Framework: React Native, Appcelerator Titanium, and Corona SDK

Data Storage: Shared Preferences, SQLite, and Realm

Analytics: Amplitude, Firebase, and AppsFlyer

What are the benefits of having a cryptocurrency business in 2022?

If we talk about the present investment scenario, a crypto business can be greatly profitable if performed with the right approach. Whether the market grows up or down, the providers will earn money as a commission fee. Have a look at the advantages of having a cryptocurrency exchange from the business point of view in detail below:

●    Lower Development Costs

The biggest reason people are attracted to the crypto exchange business is the low development cost. You won’t have to spend millions to begin such platforms when compared to other businesses nowadays. It means you can make big fortunes by entering the world of crypto exchange with lower investment.

●    Profitable in All Situations

A crypto exchange won’t have to worry much even when the market goes down. They primarily work on the commission model that charges for every transaction, whether buying or selling. People will sell their assets when the market gets bearish, whereas they will buy when it gets bullish. In each situation, profit is guaranteed for the platforms.

●    Huge Chances of Success

Digital currencies have become a very lucrative asset considering investors' high profits in the past days. As per experts, the crypto craze won’t slow down in the near future, so the chances of success for cryptocurrency exchange are very high. They still have less competition when compared with the other industries across the globe.

●    Future-Proof Business Model

If I have to make a list of business models that can generate profits in the future, cryptocurrency exchange will definitely be in the top 10. It is an incredible business that can surely give greater returns in the future. Entering this market won’t only make your future safe, but also assists in having greater profits. 

●    Minimal Development Time

Having a professional Cryptocurrency Exchange Development Company will be greatly useful and slashes your development time to a significant level. These companies have required expertise that allows them to complete the work in minimal time. 

Conclusion

An entrepreneur can create an incredible cryptocurrency exchange website or app by following the factors mentioned in this post. If we talk about the present scenario, success is guaranteed when someone has a satisfying budget and good patience.

Hire a professional team from a cryptocurrency exchange Development Company to begin your journey as soon as possible. It is imperative to have a team with desired expertise in this industry.